DUOPOLY OF SEMI-GOVERNMENTAL ORGANISATIONS INTHE IMMATURE 'COMPETITIVE' ELECTRICITY MARKET OF CYPRUS - Filenews 1/4 by Christakis Hatzilaou
The recent decision of the Parliament to allow the Cyprus Telecommunications Authority (CYTA) to operate in the electricity sector raises serious questions.
How can healthy and real competition develop when the two main players in the market will be semi-governmental organizations? Instead of strengthening competition, CYTA's entry risks further restricting the space of private suppliers and creating a duopoly of semi-public companies, which will further intensify the separation between "winners" and "losers" consumers, without a substantial reduction in prices for the vast majority of households.
With the approval of the amending bill by the Parliament on 26 March 2026, CYTA acquires the ability to supply electricity and energy to the Cypriot consumer. The decision is presented as a step towards strengthening competition and modernising the market. However, the reality is different: the "competitive" electricity market of Cyprus remains deeply immature, small, centralized and full of distortions.
"Cream-skimming" and consumer segregation
In the context of the "competitive" electricity market, private suppliers focus on large commercial and industrial consumers ("cream-skimming") by offering - compared to the EAC - price reductions of 5-10%. Therefore, in the EAC, it is left to manage the majority of household consumers (with or without photovoltaic "net metering"), small businesses and vulnerable groups. The division of consumers into "winners" and "losers" is evident:
- Winners: Large commercial and industrial consumers with private suppliers, as well as residential consumers - EAC customers - with "net metering".
- Losers: The majority of households and small businesses without photovoltaics, who bear the additional operating costs of the EAC.
The entry of CYTA does not substantially change the balance of the market, but may intensify the unfair separation of consumers, creating a duopoly of two semi-governmental organizations with different clientele. Cyta will target "easy" customers by offering combined packages (telephone, internet and electricity), while EAC will remain with the rest of the "difficult" customers who will not be able to change suppliers. The result: higher bills for the majority of consumers.
Why is the electricity market completely immature?
The Cypriot electricity market is small, isolated and without interconnection with neighbouring countries. In such a market, real and healthy competition cannot be developed simply by adding new players.
The EAC controls the vast majority of production and supply, while private renewable producers remain marginal. Most renewable energy is still compensated by regulated prices influenced by the high cost of EAC conventional thermal plants, rather than competing freely on the basis of their actual marginal costs.
This creates serious distortions and high overall costs for the consumer. In addition, the lack of electricity storage and the long delay in the implementation of the interconnection cause further problems. In such a centralized and distorted market, each new player – private or semi-public – does not create real and healthy competition, but simply redistributes existing shares, intensifying the divide between "winners" and "losers" consumers.
Conclusion – Radical reform needed
The Parliament's decision aims at modernization and the development of competition, but the Cyprus market remains completely immature. Without a radical reform of the target model, with the central axis of the complete decoupling of the cost of renewable energy sources from expensive conventional units, CYTA's entry into the market will not bring a substantial reduction in prices but rather a further distortion.
It is no exaggeration to say that the existing semi-monopoly will be replaced by a duopoly of semi-monopolies, without any real benefit - but rather at a cost - for the majority of consumers.
The electricity market in Cyprus needs radical reform, so that every new player becomes a catalyst for a real price reduction and not a mechanism for redistributing burdens. What is at stake is to ensure cheaper electricity for the majority of Cypriot consumers.
